Senior Citizen Math Problem.
I am just getting to the September 24 New York Times. I have managed to read October 19 through 26. I am pushing myself to read the papers when they arrive instead of putting them aside and ending up with a massive pile. Will keep you updated on the progress.
There is an article about the new Medicare Drug Coverage. While the article fills a quarter of the page, something does not make sense. First of all they say the response of the insurance companies to the program has been very positive, even the rural states that the officials thought would be underserved have multiple companies to choose from.
The following describes the coverage:
"Under the law, all Medicare drug plans are required to provide coverage at least as good as Medicare's standard coverage. Under the standard benefit defined by Congress, the beneficiary will be responsible for a $250 annual deductible, 25 percent of the drug cost from $251 to $2,250, and all of the next $2,850 in drug cost. Beyond that level - $5,100 a year and more - Medicare will pay about 95 percent of drug cost."
The article says the monthly premium will average $30.00. This lays out like the following:
One year of Premiums = $ 360.00
Annual deductible = $250.00
25% of first $2,000 = $500.00
Full payment of dollars over $2,251.00 = $2,850.00
TOTAL OUT OF POCKET = $3,960.00
Total Drug Cost for year to hit max and get 95% coverage = $5,100.00
Less the out of pocket cost get to the max point = $3,960.00
Actual Insurance Dollars = $1,140.00
Something just does not make much sense about this whole plan.
Is there some government funding that goes to the insurance company to provide this coverage? Why would anyone offer this? It seems that the actual money the company pays out (worst case $ 1,140) plus the expenses of administrating the individual policy are not worth only $360.
Something just does not make sense, unless the point is that the only way you get the 95% coverage is to have this policy first. Something tells me that the only ones to make money on this will be the insurance companies and the cost will come from the taxpayers. Seniors are still stuck paying almost $4,000 for the first $5,000 of drugs.
Anyone that understands this better than I do please feel free to educate the rest of us. Okay maybe I am the only one that questions this.